The province’s debacle over power purchase contracts is slowly lurching to an ignominious end.

But it’s going to be very costly for Albertans to clean up this mess.

It also means higher electricity bills are likely coming for consumers next year.

Last week, the Alberta Balancing Pool finally gave notice it’s considering terminating three power purchase arrangements (better known as PPAs) for the Sundance A, B, and C electrical generating units west of Edmonton.

It must first consult with consumer groups and Alberta’s energy minister before giving the required six months’ notice to the facility’s owner, TransAlta Corp.

“These are the most obvious candidates for cancellation,” Balancing Pool chairman Robert Bhatia said in an interview.

The moves could save consumers about $500 million in potential losses, the agency says.

To understand how we got into this quagmire, a trip down electricity memory lane is necessary.

PPAs were created as part of the Klein government’s deregulation of the power sector, giving buyers of the deals — such as utilities — the right to sell electricity from existing generation units to consumers.

As an independent government agency, the Balancing Pool markets electricity from older generation contracts that weren’t sold back in 2000.

Fast forward to 2015 and a new NDP government in Edmonton.

Six money-losing power contracts were handed back to the Balancing Pool after the Notley government hiked the provincial carbon levy on heavy industrial emitters, including coal-fired electrical plants.

That step inadvertently triggered an opt-out clause in the PPAs.

It allowed the PPA owners— including Enmax, Capital Power and TransCanada — to turn their deals over to the Balancing Pool.

As power prices plunged last year, losses inside the agency piled up, at a breathtaking cost to Albertans.

The Balancing Pool posted more than $2.5 billion in operating losses on its books last year, eventually needing loans from the government.

Since the organization must pass along any profits or losses to consumers, Albertans now face a charge on their monthly power bills, totalling $65 million this year.

Stuck with a bad hand, the Balancing Pool could have cancelled the PPAs last year, paid a termination fee to owners of the generating units and stopped the bleeding.

But it didn’t.

Instead, the group’s board of directors and government dithered — despite advice from the agency’s management it would be the “logical next step” to terminate — shouldering losses that hit $70 million a month last year.

The monthly losses now sit around $55 million.

“This whole situation just reinforces why the government should stay out of the competitive markets,” former Balancing Pool CEO Gary Reynolds, who left the organization in 2011, said in an e-mail.

“The Balancing Pool concluded that the PPAs were uneconomic in the spring of 2016, and yet they didn’t begin to move on termination until a year later …

“This delay has cost Alberta consumers almost $1 billion.”

Today, the organization is finally looking to “significantly mitigate its PPA losses” as it considers terminating the Sundance PPAs.

The reasons are clear.

Cancelling the Sundance B and C power purchase arrangements alone is expected to save the organization — and ultimately consumers — between $475 million and $518 million, according to internal analysis posted on the agency’s website.

As a point of comparison, that’s enough money to pay for all of the ambulance services at AHS this year, or cover student transportation costs at the Education Department.

These savings occur even after the Balancing Pool pays out $171 million — the remaining net book value of the PPA units — to the plant’s owner.

As if to rub salt in the wound of taxpayers, the Balancing Pool could save even more money if it wasn’t for legal action taken by the NDP government last year in the PPA affair.

Ditching two other agreements returned to the Balancing Pool by Calgary utility Enmax could save up to another $336 million, the analysis indicates.

However, the agency notes it can’t terminate these deals until the government’s lawsuit against Enmax contesting the return of the PPAs is settled — although Reynolds questions why it simply can’t proceed with its plans.

The province and Enmax both say they’re open to reaching a resolution in the case, but the litigation continues to plod through the legal system.

Wildrose MLA Don MacIntyre said the entire messy episode is slowly winding down, but not before taxpayers shoulder massive losses.

“I think this is the beginning of the end. If the government wanted to cut their losses — or our losses — I’d like to see them drop the lawsuit,” he added.

“Right now, the Balancing Pool’s hands are tied.”

Energy Minister Marg McCuaig-Boyd said she will give her feedback to the Balancing Pool in the upcoming consultation phase. Her advice will be to “just make sure they’re considering what’s best for Alberta’s interests … but at the end of the day, they make the decisions.”

The move to stem the losses will come with other consequences.

Cancelling some of the agreements could push Alberta’s wholesale electricity prices higher next year, depending on what the plant owners ultimately do with their generation. They could mothball their facilities, or offer the power back into the wholesale market with a more aggressive pricing strategy.

Without any cancellations, the Balancing Pool expects Alberta’s power prices to average $32 per megawatt-hour next year and in 2019, up from about $21 this year.

However, terminating the Sundance PPAs is projected to push electricity prices up to $36 per MW-h over the next two years.

Bhatia said the Balancing Pool is taking a staged approach to cancelling the contracts so it can see how the market reacts, one reason the agency has taken its time.

“We don’t fully know the impact on consumers,” he added.

“We think the impact of terminating these PPAs on consumers is likely to be fairly modest, but we don’t really know what that looks like until the market adjusts.”

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